♠ Posted by Emmanuel in Credit Crisis at 6/29/2010 12:06:00 AMA wise and frugal government, which shall leave men free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labour the bread it has earned - this is the sum of good government - Thomas Jefferson
The just-concluded G20 meetings are notable for who lines up where in the global political economy when it comes to stimulus versus austerity, AKA profligacy versus prudence. Unfortunately, we all know where the deficit-loving US government lines up, contrary to the wishes of America's great third president and in harmony with those of its current IOU junkie. However, it is also important to note who lines up where. With the removal of Mr. Golden Rule-Turned Stimulus Junkie Gordon Brown, the UK has moved solidly into the Jeffersonian column.
As for the rest, Irwin Stelzer has an interesting article discussing, among other things, who stacks up where:
Add to that the failure of these weakened leaders to agree how to fashion a sustainable recovery. Mr. Obama wants continued stimulus spending by surplus nations such as Germany to boost demand now that Americans are too deeply in debt to be the world's consumers of last resort. He is joined in that view by Mr. Strauss-Kahn and Indian Prime Minister Manmohan Singh. Mrs. Merkel prefers austerity, which she argues will create confidence and stepped up consumer spending. She has ECB President Jean-Claude Trichet, European Commission President José Manuel Barroso and China's President Hu Jintao in her corner. Mr. Sarkozy would like to see a bit of inflation to help pay down the debt his nation has run up with 30 years of unbalanced budgets, and push the euro exchange rate down further to make France more competitive in markets outside the euro zone and help it grow out of its indebtedness. Absent that, he fears, France, already paying a 0.5% premium over German bunds, will lose its triple-A rating, which would have a negative effect on "La Gloire Française," even more important to Mr. Sarkozy's constituents than higher interest rates.If you needed any more proof that the IMF more often than not parrots the line out of Washington, its Managing Director Dominique Strauss-Kahn sides with the Americans.
So, for the record, at least on the rhetoric:
Deficit lovers: USA to a man (duh), IMF Managing Director Dominique Strauss-Kahn, Indian PM Manmohan Singh.
Deficit haters: German Chancellor Angela Merkel, ECB President Jean-Claude Trichet, EC President Jose Manuel Barroso, British Prime Minister David Cameron, Chinese President Hu Jintao.
And somewhere in between is the canny Nicolas Sarkozy who defies description and has his own quirky agenda!